A couple looks at their finances at the kitchen table

‘Frustration’ a theme as homebuyer sentiment craters 

Fannie Mae’s sentiment index hit a new low in May, with only 14% saying now is a good time to buy a home, but sales activity is expected to increase.

June 7, 2024
3 minutes

Key points:

  • Consumers are discouraged about buying, but most sellers are still upbeat.
  • That means listings could increase “in the near future” as homeowners choose to sell “for a myriad of non-financial reasons.”
  • The largest share of consumers surveyed think mortgage rates will remain at current levels for the next year.

So when is the last time consumers felt THIS awful about buying a home? Well, never.

The Fannie Mae Home Purchase Sentiment Index hit an all-time low in May, with 86% of consumers saying that now is a bad time to buy a home.

But selling! It's got to be a good time for would-be sellers, right? Well …

As it turns out, only 64% of people believe now is a good time to sell, down from 67% the month before. And this leaves consumers and real estate professionals alike struggling to find a bright side to this challenging housing market.

At the beginning of the year, people felt optimistic about a potential drop in mortgage rates but "that simply hasn't happened, and current sentiment reflects pent-up frustration with the overall lack of purchase availability," said Fannie Mae Chief Economist Doug Duncan.

Why there's hope for more listings on the horizon

Yes, buyers are frustrated, but Duncan is also seeing the potential for an increase in listings "in the near future." That's because homeowners' feelings about selling remain mostly positive, even if they have decreased slightly.

"This suggests to us that, despite the so-called 'lock-in effect,' some homeowners may increasingly want or need to sell their homes for a myriad of non-financial reasons," Duncan said. And this will bring "slightly increased sales activity through the end of the year." 

Homeowners who do choose to sell will also be able to take advantage of home equity gains that have reached near-record highs in the past year.  

When consumers look to the future, they see things holding fairly steady, with 42% saying they think home prices will go up in the next year (the same percentage as last month). And the share who think prices will stay where they are actually increased one percentage point, to 40%.

Mixed feelings on rates, but income outlook improving

When asked about mortgage rates, meanwhile, the largest share of folks — 42% — believe rates will remain unchanged in the next 12 months, with 25% thinking they will drop and 31% expecting them to increase. That other 2% probably just doesn't want to talk about it, and we can't blame them.

There was a 1% increase in the share of people who say they are concerned about losing their job in the next 12 months, but the number is still just at 24%.

And an increasing number of people, now 20% (up from 17%), say their household income is "significantly higher" than it was a year ago.

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